Data collection is everywhere. There are more than four million closed circuit TV cameras in the UK, the police fingerprint database holds nearly six million sets of prints, and London’s congestion charging scheme automatically records the number plate of every car travelling into the capital.

It is not just the public sector. More than half of all UK adults have a Nectar card ­ the loyalty scheme used by multiple outlets including Sainsbury’s and BP. Insurance firm Norwich Union has a ‘pay as you drive’ product that relies on an in-car black box to monitor vehicle use. And Google wants to use internet search histories for everything from targeted ads to personal advice.

So it comes as no surprise that two parliamentary committees are examining privacy issues.

The potential benefits of better information are huge. Individualised insurance could lower premiums, joined-up government means improved services, and sophisticated policing techniques may enable more effective law enforcement.

What the parliamentarians hope to establish is: at what cost?

Supermarkets were one of the first businesses to realise the value of profiling their customers. Loyalty cards log details such as where people shop and what they buy, enabling the supermarket to build a profile of both individuals and shopping trends.
The schemes are voluntary and have proved popular.

‘It helps us target people with the right kind of offers, so we only contact them about something they are interested in,’ said Tesco legal services manager Nick Ealand.

The other long-established information service is credit reference agencies.

‘Accurate profiling helps the lender know they are lending responsibly, helps people get references faster, and prevents fraud,’ said Finance and Leasing Association director general-designate Stephen Sklaroff.

The concern is that as databases mushroom, individuals can no longer keep track of what is held where.

The Data Protection Act stipulates that information only be used for the purpose for which it was collected.

But there is an exemption for crime detection. Tesco has passed loyalty card information to law enforcement agencies on 200 occasions in the past year. And police made more than 400,000 requests for mobile phone records in 2006.

The common response that the innocent person has nothing to hide masks a wider constitutional issue.

The danger is that the police can create a profile of someone who has voluntarily given their information to a number of separate organisations in good faith. That person does not have the same access to information, so their potential defence is unequal, says Cambridge University professor of security Ross Anderson.

‘This centralisation of surveillance functions in a corporate state, which is allied with large corporate data owners, disempowers the citizen and undermines civil rights,’ he said.

The Home Office plan for a national biometric identity card scheme has added to the debate.

The government argues that the proposed scheme will enable joined-up public services, improve efficiency, and make life easier for citizens.

For example, better use of information, says Sir David Varney in his Treasury-commissioned review, could cut the number of agencies the recently bereaved must inform of a death from 44 to one.

But Newcastle University surveillance expert David Murakami-Wood says the
same benefits are possible without the Big Brother overtones of a central database.

‘You do not need a database or ID cards to improve the flow of information,’ he said.

‘You could have an organisation within government dealing with information and making sure it gets to the right place.’

As data analysis tools become more sophisticated, the debate is shifting from the amount of information collected to the complex profiling that can now be performed.
And as commercial firms diversify their services ­ supermarkets providing insurance, for example ­ the profiles are more detailed than ever.

It may be that the benefits will ultimately outweigh consumers’ concerns, and so raise the bar for government services.

Data mining is central to Google’s plan to exploit the detailed profiles of its users built up from search histories. It wants to provide services that customers do not know they need, even offering advice on what kind of job to take or what to do to tomorrow.

In response to outraged privacy campaigners the search giant emphasises that any profiling services will be entirely voluntary, and all records anonymised after 18 months.

But the data will still be subject to the Regulation of Investigatory Powers Act, which requires ISPs to disclose information to the police.

Ultimately, consumers can vote with their feet.

It is possible not to use Google, not to have a loyalty card, to choose a less targeted insurance package. The question will be: at what cost?